Stocks to Watch – 6 Stocks & ETFs That are Down, But Not Out

March 26, 2024No Comments

Stocks to Watch – A Switch from Our Usual Focus

 

This show is typically all about technical analysis but today we are going to cover 6 ‘down-and-out’, but maybe ‘not so out’ [00:00:30] stock sectors and individual stocks. I’m going to focus on some ETFs that cover some of the sectors and then a couple of individual stock charts that we are monitoring. These are not the usual candidates that I talk about. You guys know that I love breakouts – they are my favorite thing. I mean everybody likes an uptrend, and of course, I like buying stocks [00:01:00] in an uptrend too, but my very favorite thing to do is to see a stock that’s fallen, based, and broken out. In fact, I wrote a whole book about it called Sideways.

I’m a big believer in that formation. The stuff we’re going to look at today does not show signs of that base breakout yet, but what I am going to suggest is these securities – all six of them – have come down to a support level [00:01:30] that may be worth considering if they can prove – the keyword being “if” – if they can prove that the support level is going to hold for a little while. This might be proof that you are truly buying at the bottom, and doesn’t everybody want to buy at the bottom? I’m not promising that these are at the bottom, but I am promising [00:02:00] that they all show signs of nearing really strong support levels and they’re worth keeping your eyes on.

 

Stocks to Watch: Lumber

In terms of the stocks to watch, we’re going to start off with Lumber. This is the Lumber index itself. It’s the [00:02:30] continuous contract, the futures contract, and it’s from stockcharts.com. This is the Invesco MSCI Global Timber ETF, its ticker is CUT on the NYSE, and what [00:03:06] we see here is a very volatile chart if there ever was one. I mean you guys will remember the COVID supply crunch – the spike in prices on the continuous contract was around 1,750, and it’s currently 344. Well, the interesting thing about the current pricing is that even though it’s made a lower low – it is not yet in a position that I would personally be buying – I want you to look at where that lower low is. It’s at around 344 and if you go back to 2020, and before 2019, that’s pretty close to where Lumber was trading. So, I feel that if you see this price hold and a bounce, [00:04:00] and especially if you saw this 200-day moving average, the red line here taken out, and even better this high here at around 500 [00:04:09] eventually taken out, you’ve got a real case for some upside.

Stocks to watch - Lumberold

A lot has to happen. More than likely, you’ll see some sideways basing action if it’s going to hold at the 2019-2020 support level. There’s a lot of “ifs” on this chart. Would I recommend buying into [00:04:30] this or even taking a toe in the water? No, I would not. I don’t think it’s ready to buy yet.  You don’t want to get involved with this security too soon, but I do recommend you keep an eye on it because if it does base, there’s tons of upside potential.  The key word is, “IF”.

 

Stocks to Watch: Natural Gas

[00:05:00] Natural Gas is another of the stocks to watch. Is it ‘down and out’ or ‘down but not out’? Well, you can see again going back to 2020, there was a double bottom at pretty much the precise same level as it’s trading right now. The interesting thing here is that Natural Gas made a low in February – you can see on the right-hand side of the chart – and has picked up, did a little bit of a peak around $2, and is settled in around $1.74-$1.75 [00:05:30] or so. There are some signs of a base, and that’s why I am very interested in this chart. I don’t specifically own Natural Gas, but I do think that if we saw something like what happened in 2020, a lot of bouncing around in this area, [00:05:45] it’ll probably launch. Now again, there’s an “if” there. This particular commodity has to form support, bounce around up and down a bit, and then break [00:06:00] out before I would be a buyer. But I am keeping it on my radar, and I think this is one you should keep on yours as well.

Stocks to watch - Natgas

Stocks to Watch: Boeing

[00:06:11] Another stock to watch is Boeing. It’s an individual stock (BA on the NYSE), and what we’re seeing here is a bit of a trading range of late, and the current price has come down to around $184. [00:06:30] That is a support level. The last time it hit $184, it bounced off quite nicely. So the question is – and that was by the way, I should mention that there was an old resistance level when it did a double bottom in 2022 – and that was around the same price range within at least $5 or so. So, I’m going to suggest that if Boeing actually can prove to hold this $180 or so price range, it will probably move up. What would [00:07:00] be my initial target? Around $220. Not a bad trade if you can get it coming just off of the $184 level, perhaps higher.

Stocks to Watch BA

Let’s see. But first things first, again, it’s starting to show signs that it wants to hold the current level. We need a little bit more proof, but it’s encouraging. If you were to look closely at this chart here, you’d see it was a white candle. I’d also point out just some of the [00:07:30] indicators I like looking at. This is the Money Flow Index, which is a momentum index applied to cumulative money flow. And you can see that it is nowhere near overbought. It is trending down, but it’s starting to get to a point where in the past – like here and here – the indicator has hooked up. MACD, trending down – no signs of changing. Same with RSI at the bottom. They’re becoming oversold, [00:08:00] but they’re not quite signaling a buy. So just keep an eye on Boeing. It’s not one that I personally own. Just an interesting potential and I think what you’ll find is all of the charts I’m showing you here today are not ready for buying just yet, but they’re showing potential.

 

Stocks to Watch: CORN ETF

Here’s a Corn ETF (CORN on the NYSE), and it is trading at a [00:08:30] 2021 support level. So the question is, will it do what it did in 2021? Which, as you can see was a little bit of a triangle consolidation. Here’s one back in 2020 [00:08:46], it’s kind of a double bottom. Point is, eventually if they break out you can see lots of upsides that happened there as well. So, the question is, will this consolidation last [00:09:00] a little while and break out? We can’t say that just yet. This is not in a position that I would be buying it, but it is certainly a position that I am watching and recommending as a stock to watch. These would not fit into our conservative model, but we’re always looking for these turnaround stocks that have based and show potential [00:09:30] for our more aggressive strategy.

Stocks to Watch CORN

Stocks to Watch: PPLT

PPLT is a stock that we disclose is included as a holding in ValueTrend’s aggressive model. It is an ETF, the Platinum Physical Shares ETF (PPLT on NYSE). And PPLT has a trading range as you can see where a bottom of around $80 seems to be holding and it’s been holding since 2022. [00:10:00] It’s been a pretty good pattern and it seems to have some resistance. The old double top, somewhere around ’23 was around $100, but even on the lower range you’re still seeing around $90 and this level has been hit multiple times – and was an old support level back in 2021. [00:10:19]

PPLT

So, my thoughts are that PPLT could move into the $90 to $92 range in the near term. Now, as I said, this is not a recommendation [00:10:30] because all of these positions that I am talking about in this video today are for aggressive traders only. We do not own PPLT in our conservative platform, our ValueTrend Equity Platform, which is our bread-and-butter platform, that most of our clients own. We hold it only in our aggressive platform, which is a much different beast than our conservative strategy. But for what it’s worth, we understand the support and resistance [00:11:00] levels. Whenever you’re trading something like this, and you see a support level – in this case somewhere near $90 – if the stock or ETF cracks that $90 significantly, that lasts more than a few days. So, you can get cracks like this, but if it breaks down and kind of permanently breaks down like it did here [00:11:20], you want to get out of the position.

We know our stop loss is at $77 or so, so we’d probably be looking at selling it [00:11:30] because it would be well below the $84 level. I think I was saying $90 is a target. So $80 is around the support level. So, if we saw $77 or something like that, we would sell this position. If we see this stock hit around $90-$92, we will sell the position for a profit. A high-risk, reasonably interesting-looking trade, as far as we are concerned [00:12:00] for aggressive traders only.

 

Stocks to Watch: Tesla

Alright, and I’m going to bring up one that I brought up on another video a while ago as one of the stocks to watch, and that’s Tesla. I brought up Tesla as a potential trade here. It had gapped down and I said it might fill the gap and if it can fill the gap, it could get up to here – [00:12:19] – the old downtrend arrow. It filled the gap, but it then found a fundamental reason to fall once again. Just remember, right now Tesla is a trader only because it’s in a downtrend, but it seems to be bouncing off of a level that was supported back in early ’23, around $160 [00:12:45]. So let’s see. When I was originally looking at it, it was signaling oversold on many of the indicators [00:13:00] like MACD, the Momentum, Money Flow Momentum, and RSI, so we didn’t buy it. But right now, they’re not really all that oversold and they’re not hooking up. So, keep an eye, on it because there is that support level that comes back to early 2023 worth watching again.

Stocks to Watch TSLA

All of these charts – with the exception of maybe PPLT, [00:13:37] which we own in our aggressive platform at ValueTrend – are for aggressive traders only. They’re not bread-and-butter positions that conservative investors should be buying. There are risks and most of them are not anywhere near a position that I would [00:14:00] be buying them right now. But I do think that you’ve got to keep stuff like this on your watch list because when you have a stock that’s fallen aggressively, is approaching an old support level that it has bounced off of in the past, there’s a decent chance that it will once again find support and bounce off of that level. You need proof, you need a base, you need that base to break out. But, it’s definitely worth watching candidates like this because sometimes when you get a stock [00:14:30] or ETF that is down and out and then forms a base and breaks out, these can be some of the biggest returns you’ll ever see. A prime example is the stock market darling of today, Nvidia (NVDA on the NYSE). If you look at that stock [00:14:50] going back just two years ago, it was kind of a dog. It is based, broke out, and you know what it’s done.

So, just keep in mind that sometimes you [00:15:00] can get good companies that have reported poorly for a while, or have had some bad news affecting them, but if it’s truly a good company, you can find support and bounce off. Charts will tell you the truth. Don’t believe the news. Don’t believe the media. Don’t believe sell-side Analysts. Believe what the charts are telling you. But the charts will tell you if – and when – these kinds of stocks are ready to go. Thanks for watching. Have a good one and I’ll see you next week.

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